Fonterra sets its fixed price

Fonterra suppliers participating in the company’s Fixed Base Milk Price will be paid a guaranteed $6.80/kg MS for a portion of their milk for the 2019-20 season.

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Fonterra suppliers participating in the company’s Fixed Base Milk Price will be paid a guaranteed $6.80/kg MS for a portion of their milk for the 2019-20 season.

Fixed Base Milk Price is a price risk management tool that lets farmers lock in a set price for up to 70 per cent of the season’s milk before it starts, in a bid to provide greater price certainty and allow them to plan ahead.

Fonterra Australia’s farm source general manager Matt Watt said there continued to be strong interest in the program, which is now in its sixth year.

‘‘The last few years have shown that two of the biggest challenges facing farmers are seasonal conditions and market fluctuations impacting the milk price,’’ he said.

‘‘We can’t control the climate, but with Fixed Base Milk Price we can at least help to take out some of the market risk.’’

To determine the volumes and prices of milk solids under Fixed Base Milk Price, Fonterra used a tender allocation process whereby suppliers offered certain volumes of milk solids at a set price, which Fonterra then worked to match to customer demand.